“Growth of MSMEs (micro, small and medium enterprises) has contributed massively to the Make in India programme, as strong domestic MSMEs lead to increased indigenous production both for domestic markets as well as for exports,” finance minister Nirmala Sitharaman said on Saturday.
She said PMMY has helped generate large-scale employment opportunities at the grassroots level and proved to be a game changer in boosting the Indian economy. PMMY was launched on April 8, 2015, by Prime Minister Narendra Modi to facilitate easy collateral-free microcredit of up to ₹10 lakh to non-corporate, non-farm small and micro-entrepreneurs for income-generating activities.
Loans under the scheme are provided by member lending institutions – banks, non-banking financial companies, microfinance institutions and other financial intermediaries – the finance ministry said in a statement on Saturday.
“Since the launch of the scheme, as of March 24, 2023, about ₹23.2 lakh crore has been sanctioned in 40.82 crore loan accounts,” Sitharaman said on the eighth anniversary of the scheme. About 68% of accounts under the scheme belong to women entrepreneurs, the minister said.
Easier Credit for Micro-enterprises | page 7
About 51% of accounts belong to entrepreneurs from scheduled castes, scheduled tribes and other backward classes, the finance minister said. This demonstrates that easy availability of credit to budding entrepreneurs has led to innovation and sustained increase in per capita income, said Sitharaman.Minister of state for finance Bhagwat K Karad said PMMY aims to provide collateral-free access to credit in a seamless manner to micro-enterprises. “It has brought the unserved and under-served sections of the society within the framework of institutional credit,” he said.
The government policy of promoting the scheme has led millions of MSME enterprises in the formal economy and has helped them escape the clutches of moneylenders offering very high-cost funds, said Karad. Implementation of the financial inclusion programme is based on three pillars – banking the unbanked, securing the unsecured and funding the unfunded. The scheme was launched to encourage small businesses and banks were asked to provide collateral-free loans up to ₹10 lakh under three categories – Shishu (up to ₹50,000), Kishore (between ₹50,000 and ₹5 lakh) and Tarun (₹10 lakh).
Shishu accounts for 83% of the total loans, followed by Kishore (15%) and Tarun (2%).
Targets have been achieved since inception of the scheme, except during 2020-21 due to the Covid-19 pandemic, the statement said.